Tax Relief for the Masses: 50 Exemptions, Reliefs to Benefit from January 2026

By Emmanuel Kwada

In a move hailed by the government as a landmark shift toward equitable taxation, Nigeria’s newly enacted tax reform laws will usher in fifty exemptions and relief measures starting January 1, 2026, designed to shield low-income earners, middle-class families, small businesses, and key sectors from undue fiscal pressure.

Signed into law by President Bola Tinubu after months of legislative debate, the reforms consolidate outdated statutes into a streamlined framework that prioritizes relief for the vulnerable while aiming to broaden revenue collection from higher earners and larger corporations.

The package spans personal income tax, company profits, value-added tax, capital gains, stamp duties, and more, with the Presidential Fiscal Policy and Tax Reforms Committee emphasizing that the changes will put real money back into the pockets of ordinary Nigerians amid persistent economic challenges.

For workers, personal income tax exemptions kick in immediately for anyone earning the national minimum wage or less, ensuring that the lowest-paid employees face no PAYE deductions whatsoever.

Those with annual gross incomes up to one million two hundred thousand naira see their taxable base shrink to around eight hundred thousand naira or lower, often resulting in zero liability. Taxpayers earning up to twenty million naira annually benefit from reduced PAYE rates, while gifts of any value remain entirely outside the tax net.

Everyday financial obligations also qualify for relief: contributions to pension fund administrators, premiums under the National Health Insurance Scheme, payments into the National Housing Fund, interest on mortgages for owner-occupied homes, and life insurance or annuity costs all count as allowable deductions.

Renters can claim twenty percent of their annual rent as relief, capped at five hundred thousand naira, providing a cushion in urban centers where housing costs continue to climb.

Retirees and those facing job loss find strong protections built in. Pension funds and assets managed under the Pension Reform Act are fully tax-exempt, as are pensions, gratuities, and any retirement benefits issued in compliance with the act.

Compensation for employment termination up to fifty million naira escapes taxation entirely, offering a safety net during transitions.

When it comes to selling assets, capital gains tax vanishes on the disposal of an owner-occupied residence, personal effects or household items valued up to five million naira, and up to two private vehicles per year.

Share transactions yield tax-free gains if annual profits stay below one hundred fifty million naira or ten million naira in absolute terms, or if proceeds are reinvested elsewhere.

Non-commercial activities by pension funds, registered charities, and religious organizations remain untouched by capital gains levies.

Small enterprises form a cornerstone of the relief strategy. Companies with annual turnover not exceeding one hundred million naira and fixed assets below two hundred fifty million naira pay zero percent company income tax.

Labeled startups enjoy complete exemption, while agricultural ventures in crop production, livestock, or dairy operations receive a five-year tax holiday from their launch date.

Employers who boost salaries, introduce wage awards, or provide transport subsidies for low-wage staff claim an additional fifty percent deduction on those costs.

Hiring and retaining new workers for at least three years triggers a fifty percent salary deduction, and venture capital, private equity, accelerators, or incubators investing in approved startups see their gains exempt.

The four percent development levy no longer applies to small companies, and withholding tax obligations disappear for small firms, manufacturers, and agricultural businesses on both incoming revenues and supplier payments.

Value-added tax undergoes perhaps the most visible transformation for consumers. Basic food items carry zero percent VAT, as do residential rents, educational services and materials, medical consultations, and pharmaceutical products.

Baby products, sanitary towels, pads, tampons, disability aids such as hearing aids, wheelchairs, and braille materials, along with shared passenger road transport outside charter services, join the exempt list.

Agricultural inputs including fertilizers, seeds, seedlings, animal feeds, and live animals face no VAT, nor do purchases, leases, or hires of farming equipment.

Electric vehicles and their components, humanitarian donations, land, and buildings round out the exemptions. Small companies below the one hundred million naira turnover threshold are relieved of charging or remitting VAT altogether, and producers of zero-rated or exempt goods can now reclaim full input VAT on assets and overheads. Diesel, petrol, and solar power equipment see VAT suspended or fully removed.

Banking transactions gain breathing room through stamp duty waivers on electronic money transfers under ten thousand naira, salary disbursements, intra-bank movements, government securities, share transfers, and all documentation related to stock exchanges.

Government spokespersons describe the suite of measures as the most pro-poor tax overhaul in decades, arguing that removing these burdens will stimulate consumption, support entrepreneurship, and encourage formalization of small-scale operations.

The committee underscores that higher income brackets and multinational entities will contribute proportionally more, funding infrastructure and social programs without squeezing the masses.

To combat misinformation, the committee has launched a public awareness drive, inviting nominations for content creators already educating audiences on the reforms or those capable of doing so responsibly.

The top twenty nominees, selected by volume and quality of endorsements, will receive specialized training to disseminate clear, balanced tax guidance.

Interested parties can tag influencers on social platforms or complete the online form, with submissions closing November 9, 2025.

Economists monitoring the rollout note that while the exemptions address immediate pain points, sustained impact will depend on effective implementation, transparent revenue use, and complementary policies to tame inflation and create jobs.

For now, millions of Nigerians—from market traders to factory workers, farmers to young families—stand to retain more of their earnings come the new year, marking a pivotal chapter in the nation’s fiscal story.